Indian hotel industry writes off 2020

Return to 2019 business levels not until 2022


June 20, 2020

/ By / New Delhi

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Unlike many other hoteliers in the country, Segiyane Paquiry, who runs hotels like Villa Shanti in Puducherry, says he has retained his entire staff despite the lockdown and the complete absence of business

Even though hotels in many states across India were allowed to reopen a fortnight ago, most hoteliers believe it would take at least two years for business to return.

The Taj Rambagh Palace in Jaipur is one of the iconic hotels in the capital of Rajasthan. First built in 1835, the property went through various transitions and refurbishments to be last used as the residence of the former Jaipur royal family of Sawai Man Singh II and his queen Gayatri Devi. Today, it serves as one of the premiere hotels of the Taj group and attracts well-heeled customers not just from across India but indeed across the world.

However, even weeks after it reopened, the property with 78 grand luxury rooms restored to their royal glory, continued to be deserted with hardly any guests. The story is similar at practically all the hotels across the country that have only recently been allowed to restart operations after a nearly three-month long closure due to the coronavirus pandemic. The closure has already led to catastrophic results for the industry with hundreds of hotels being forced to either lay off several employees or just simply locking doors forever. “It may be early days yet, but the reports are that dozens of smaller and medium hotels in and around here have shut down for good,” Segiyane Paquiry, a French investor of Indian origin who has created four hotels in the southern city of Puducherry, a former French colony, tells Media India Group.

The story is same across the country, in the Himalayan north-eastern state of Sikkim, where again several hotels have down the shutters for good. According to the hotel industry association, FHRAI, so far hundreds of hotels have already closed down, while thousands more could suffer the same fate unless the government intervenes urgently with remedial action and lends a helping hand to the industry. The demands of the industry are rather basic, involving deferred taxes, reduction in electricity bills but the most important demand concerns relaxation of the terms on loan repayments. “As the hotel industry is very capital intensive, it is crucial that the government allows the hotels to defer repayment of the principal and interest for the next few months and without any penalties,’’ says Apurv Kumar, managing director of Clarks Group of hotels, with over 150 properties across the nation, including Clarks Amer in Jaipur where he is based.

Another key demand concerns help in payment of salaries for the hotel employees as long as the business stays at record low levels. “In many European nations, the governments paid out money to the people in order to ensure that they can survive and manage during the crisis. However, here in India, we lack that kind of security system and as the hotels have been operating on total loss since the lockdown began, it would not be possible for all the hotels in the country to keep on paying full salary to the employees,’’ adds Kumar.

K Abhilash, director of Kairali Ayurvedic Village, an NABH-certified Ayurvedic treatment facility built in a resort environment, in the southern state of Kerala agrees that the going has been very tough for his company as well. “Even though we have had absolutely no revenues since the lockdown began, we have rather high operational costs of between INR 1.5-2 million a month including the basic maintenance of the resort and payment of salaries. We have had to send some of our staff on leave without pay and have retrained others so that they can work in other verticals of the company that can support to have them on the payroll,” he says.

Though the lockdown has been eased to a great extent in the country, the hotel industry’s troubles are far from over. Most hoteliers are extremely pessimistic about the possibility of a revival in the immediate or even near future. “We have not received any guests at all since we reopened earlier this month. One major factor is the trouble in travel within the country, while the fact that many of our key facilities like spa and pool are still closed due to government regulations, I don’t see much interest from clients who would like to enjoy all facilities when they pay the top dollar,’’ the general manager of an ultra-luxury resort in Jaipur belonging to a leading hotel group in the country tells Media India Group.

The hotel operators also complain about the arbitrary manner in which rules are changed and the sharp variance in rules governing travel and hospitality in various states in the country which also act as a deterrent for the domestic traffic which would resume before the international tourists start coming back to India.

Abhilash says that as 55 pc clients of his company are from overseas, the lockdown has meant the entire year has been washed out as the season starts in September and continues until March. With no clarity on the resumption of international flight connections, Kairali will remain shut all through this year. “We have decided to further train our current staff and renovate the whole property and will re-open only in January 2021. As explained earlier, a major part of our visitors are from outside India. We don’t see that many foreign visitors visiting India in the current short term. Air connectivity is also an issue,” Abhilash tells Media India Group.

Apurv Kumar is even more pessimistic about a revival. “Though some domestic tourists could start travelling in a few months, I don’t expect foreign guests to come to India for much longer than that. I can say that it could take upto 2022 for the real numbers to show up again,” says Kumar.

Another challenge for the hoteliers would be that even when tourists start travelling again they may look for bargain deals due to the economic shock of the lockdowns, not just in India but across the world. However, the hotels themselves will see a significant rise in their operational costs due to the new regulations governing safety and hygiene such as social distancing, sanitisation and protective gear for the staff. “A higher price could indeed become a deterrent, at least for some of our clients,’’ says Abhilash.



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